A US trade association for the stock market industry has called for an overhaul of the "outdated" technology systems that exchanges used for their share trading.

The Securities Industry and Financial Markets Association (SIFMA) also told the Securities and Exchange Commission (SEC) that it was imperative that brokers, dealers and other participants in the investment community were able to contribute to the reforms.

The SEC has already said that after outages at the NASDAQ exchange, the securities information processors or SIPs, which compute quotations and the price of stocks, need to be reviewed by self-regulatory organisations.

SIFMA said in a letter to the commission that the problem with the SIP systems was that they were too old to support current markets.

"The system was designed more than 30 years ago, and it has been nearly a decade since the commission examined the issue, which was at a time when the benchmark for execution speed was one second," the association wrote.

"Over that time, markets have evolved dramatically through the processing power of today’s technology – with execution times measured in milliseconds and microseconds – as well as widespread retail investor participation in the markets, decimalisation, the exponential growth of daily trading volume, and the for-profit status of the securities exchanges."

The industry body added that the system was underfunded and suffered from a lack of transparency, competition and insulated governance.

"We believe the time is ripe for reconsidering how the SIPs are governed, controlled, and operate under the commission’s oversight," SIFMA said.

"We urge the commission to work with the self-regulatory organisations and industry members to examine the operation and organisation of the SIPs more broadly and develop broader action plans for the SIPs that revamp governance and address conflicts of interest, increase transparency in operations, and provide for increased efficiencies, including the introduction of competitive forces."

The SEC's review was sparked by both the Facebook IPOcalpyse last year and another outage on the NASDAQ in August when trading was halted for three hours.

The commission has told self-regulators to look into five issues it has with the SIPs system, including kill switches for any exchanges that don't already have one to isolate them from the rest of the markets. ®